Core sector contracts in August

New Delhi: Reflecting the continued weakness in economic activity, the eight core sectors contracted 0.5 per cent in August to a three-and-a-half year low of 0.5 per cent, as production in five key sectors shrank and showed negative growth. Five industries--coal, crude oil, natural gas, cement, and electricity--recorded negative growth. The eight sectors had expanded by 4.7 per cent in August last year, according to government data released on Monday.

The previous low was recorded at -1.3 in November 2015.

During April-August, growth in the eight core industries grew by 2.4 per cent from 5.7 per cent in the year-ago period.

According to data of the Commerce and Industry Ministry, “coal, crude oil, natural gas, cement, and electricity recorded a negative growth of 8.6 per cent, 5.4 per cent, 3.9 per cent, 4.9 per cent and 2.9 per cent, respectively, in August.

“However, fertiliser and steel production grew by 2.9 per cent and 5 per cent, respectively.

Rating agency Icra said: "The performance of the core sectors in August 2019 was disappointingly weak, with a broad-based deterioration in six of the eight constituents and as many as five sectors recording a year-on-year contraction in that month".

The data confirms the view that the modest pickup in the IIP growth in July did not signal the start of an industrial recovery, it said.